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It's all about jacking up the stock price for shareholders. Unfortunately.
by cmer 8y ago
It's all about jacking up the stock price for shareholders. Unfortunately.
- simonsarris 8y agoUnfortunately? Shareholders buy shares for two reasons: 1. The share price may go up 2. The dividends pay out These have been the reasons for buying shares since shares of the Dutch East India company was chartered. If neither of these ever happened, there would be no shares purchased. A buyback is just a bonus instead of a salary. You could make the criticism that a company having nothing better to do with its money is bad, and I agree, but in the interim paying it out as a bonus is a great way to reward shareholders for holding. It's also better than a dividend in case next year the company does find something better to invest the money in, because investors really don't like when companies decrease dividends.